Business Maverick: J&J’s legal strategy on cancer suits questioned by appeals court

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Johnson & Johnson faced tough questions from federal appellate judges about whether a unit’s bankruptcy designed to deal with more than 40,000 cancer lawsuits over its baby powder was legitimate.

The three-judge panel in Philadelphia heard arguments about the Chapter 11 petition of LTL Management and will decide later whether the case was filed in good faith, or should be thrown out because J&J and its units do not face any immediate financial distress. Should J&J and LTL lose, juries would once again hear talc cancer claims.

The three-judge panel will decide whether the bankruptcy should be dismissed, which would allow the lawsuits to resume. The judges asked LTL’s lawyers whether the case was really filed in order to protect J&J from the lawsuits, or to give the company an advantage in negotiating a deal to end them all, as cancer victims claim.

J&J has argued the insolvency case of LTL is the only way of corralling talc litigation costs and ensuring all victims get a fair payment.

 

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